In her book It Ain't What You Give It's the Way That You Give It, Caroline Fiennes offers a clear and succinct guide to giving more effectively. The book provides a compact and accessible introduction to making effective charitable donations. The style is simple and straightforward, and the content is robust. The book provides a wealth of great advice, while exploring many of the complex mechanisms which have an impact on the effectiveness of both the way we donate, and who we donate to.
In this review I am going to focus on a few of the key points mentioned throughout the book. Those of you more familiar with Giving What We Can will notice a great deal of overlap between her and our thought on the challenges of effective giving, and the suggestions she provides for finding the most effective organizations. That said, there are a few points where the two approaches diverge.
Starting with Your Heart
How should we choose which charities to support? As you are likely aware, Giving What We Can advocates supporting those charities which do the most to help reduce poverty and suffering in the developing world. In practice this has involved recommending charities that do the most to combat preventable disease, as measured by reduction in the loss of years of health life, or QALYs (Quality-Adjusted Life Years). Fiennes on the other hand argues that we should choose whichever charity best addresses the cause we care the most about. While these two methods might lead us to choose the same charities (a donor might care about poverty in the developing world), there is a strong possibility that we will naturally care about more specific problems, like the wellbeing of local sports teams, or the promotion of creativity in our schools. Fiennes argues that when it comes to choosing causes we should go with our heart, and have our heads decide which charity best address our concerns.
While this approach is likely to be more agreeable to most readers, there are some worries about the general impact of advocating this perspective. We might end up supporting causes which do less good in the world because we are biased toward caring about our particular community, or the wellbeing of a particular kind of animal (cute ones most likely). An individual in favour of Fiennes' method could argue that there are more than enough problems to go around, and that by allowing individuals to follow their passions, there will be more good done overall than if we limiting everyone to support a small group of charities focused on improving health in the developing world.
Perhaps it is easier to get people to think about effectiveness if you aren't trying to change the cause they focus on. On the other hand, the greatest gains in effectiveness - as measured by improving the welfare and flourishing of people - may be made by changing your focus at the highest level.
Nonetheless, while Fiennes and Giving What We Can may have different attitudes towards cause selection, they both agree that when we choose a charity it needs to be effective, so let's dive into some of the advice she provides for selecting these effective charities.
A good first step for choosing the best charities is to avoid common misconceptions about what makes a charity effective. As has been noted in the past, administration costs are a terrible way to judge a charity's effectiveness. We shouldn't judge a charity by its administrative cost, either as a sum total or as percentage of the operating budget, because these costs don't reflect what is really important, which is the impact the charity is having on the cause it is targeting. Arguably, what drives individuals' interests in administrative cost is their desire to have the money they donate go to the cause they care about. But as the book rightly points out, 'administration' is a necessary component of successfully addressing whatever cause the donor cares about. In the vast majority of cases, it is not ideal for money to go straight to the projects on the ground, there have to be individuals who coordinate these projects, and more importantly, who assess the effectiveness of the projects that are being funded.
Fiennes cites a study by Professor Dean Karlan of Yale, which analysed the top charities ranked by GiveWell on the basis of administration cost. This study found that the most effective charities spent more of their budget on administrative cost than their less-effective competitors. Fiennes argues that these results should not surprise us, more administration, when used effectively, means better management which in turn means more effective programmes. As she argues repeatedly throughout the book, focusing our attention on the most effective programmes has a dramatic effect on how much good we can do in the world.
Alright, so administrative cost is no proxy indicator for judging effectiveness, but surely we should look at other indicators, perhaps how much money the organization spends on office space, or fundraising? Fiennes again says no. While those other factors may be tolerable tie breakers, the first (and in most cases last) thing we should be looking at is the effectiveness of the charity. To drive home this point, Fiennes draws on her experience working as a teacher in India in a village in Tamil Nadu. When she worked in the school she noticed that many children would not attend class. In order to change this situation, the organization she was working with explored several options to solve the problems which prevented the children from going to school. One suggested problem was that the children were needed to help their families, and so a 'conditional cash transfer' programme was set up in order to financially compensate the families that allowed their children to go to school. This programme cost about $1,000 a year to keep a child in school. Fiennes then notes another unforeseen problem that was one of the root causes of students' absence from school - the prevalence of intestinal worms, which causes everything from malaise and lethargy to extreme pain. A deworming treatment, costing only $40 effectively achieved the same goal of getting a child into school.
Using this real world experience as a guide, Fiennes points out that a charity which adopted the deworming method would be 25 times more effective than a charity implementing conditional cash transfers. Using a bit of math, we can quickly see how irrelevant the supposed 'efficiency' of an organization is. Let's assume that a particular $10,000 deworming charity is horribly wasteful, and assume it spends 95% of its income on parties and handbags. This highly wasteful charity would still be more effective than a charity of the same size which spent 100% of its budget on a conditional cash transfer programme! (Charity A: 10,000-9,500 (95% waste) = 500/40(per child) = 12 children helped). Charity B: 10,000-0 (0% waste) = 10,000/1,000 (per child) = 10 children helped). This extreme example shows that when we are considering which charity to choose, our primary focus should be on the effectiveness of those charity's programmes, not on the distribution of their spending on fundraising and office space.
Choosing the Best Charities
Alright, so we aren't going to choose our charities on the basis of administrative costs, and we are going to focus on the effectiveness of their programmes, but how exactly do we figure out which programmes are the most effective? Fiennes provides us with two methods for finding the best charities. The first is to refer to the analysis given by third party charity evaluation agencies. She provides a long list, including GiveWell, and Innovations for Poverty Action (IPA). As we have seen, the conclusions of these groups can be controversial, and there may be cases where we want to assess a charity for ourselves. That said, analysing the overall effectiveness of a charity can be a tough business, certainly the sort of analysis GWWC looks to offer involves detailed quantitative research most individual donors don't have the time or interest to perform themselves. Luckily, Fiennes provides us with a rough and ready 60 minute guide on how to assess the general effectiveness of a charity you are looking to support. While this analysis won't give you a total in-depth conclusion about the effectiveness of the organisation, it will allow you to have a general sense as to whether or not the organization you choose will be effective in promoting the cause you care about.
This review has only covered a few of the topics explored by the book. Others include
There is also an entire section dedicated to what to do if you are a large donor, as well as a section on more advanced theories underpinning charitable assessment. If you are interested in effective giving, I highly recommend picking up a copy of this book!